How Shops Diversify

How Shops Diversify

WORDS BY ROSA SOPHIA

Diversifying into unexplored categories or expanding skillsets can provide numerous benefits. Retailers share how diversifying into categories such as paint protection, car wrapping and motorcycle audio helped raise awareness and increase bottom line profits.

When it comes to finding new avenues for exploration, retailers agree that diversifying can revitalize a business, but can also offer unexpected challenges. LYNX Customs in Centennial, Colo. began diversifying into car wrapping a couple of years ago, according to owner Luke Farley.

In 2017, the team wrapped four or five cars, but the following year, they wrapped over 50, Farley added. “It suddenly became one of our biggest categories,” he said. “It’s had a huge impact on our bottom line, so much that we’re changing our business branding and advertising to target that market.”

The shop expects to double the number of vehicle wraps in 2019. “Product diversification can always be tricky. We’ve had really good luck with it and we found that some of our skillsets transferred right over.” Farley noted that technicians who were already installing window tint and paint protection were able to pick up car wrapping techniques quickly.

Other mobile electronics shops might do well to consider the category, Farley said, adding that the shop obtained specialized training.

Still, he advised shop owners and managers to be very careful when deciding to diversify. “You don’t want to get stuck with products you can’t sell, or spread yourself too thin to where you’re trying to be everything to everyone,” he said. “There’s a lot to consider as far as strategy when you choose to diversify.”

Plan and Execute a Careful Strategy When Parish Tanner of Ocala Car Audio in Ocala, Fla. was thinking about what his business could expand into, he said he thought about who he most enjoyed doing business with, as well as what category might be profitable for the shop.

“I ride motorcycles myself, so I went and purchased another Harley [Davidson] in the third quarter of 2015,” Tanner said. “From 2009 to 2015, we’d only done nine Harleys. In 2016, we did 13 Harleys. In 2017, we did 26. Last year, I did 80.”

Tanner attributed this to the demo vehicle, and the shop’s sponsorship of local bike nights. “I was at one every month and just started hanging out in that crowd,” he said.

“We have brought in some accessory lines,” he added. “We sell seats and grips and other bolt-on stuff.” Recent growth in the Harley-Davidson market gave Tanner a chance to bring this into Ocala Car Audio. “We’ll run some advertising,” he noted, “but usually we’ll just do sponsorships.”

However, Tanner said, the addition of paint protection film to the shop’s list of services did, indeed, require marketing strategy. “It becomes an education process,” he said. “We’re doing that through Facebook and Instagram.” The shop has had positive results from Facebook advertising. “Being on the 3M dealer locator helps a lot.”

Content marketing via the business’s website—articles about paint protection film—has raised Ocala Car Audio’s site to higher listings on the web, Tanner said.

Prestige Car Audio & Marine in Metairie, La. is in the beginning stages of expanding marine categories, according to store manager Dustin Daigle. “By next summer, I would expect to see an increase in business,” Daigle said. “It’s a year-long plan we’re putting in place.”

The shop anticipates cross-over when it comes to truck owners who tow their own boats, Daigle added. “We do a lot of marine audio, and not so much marine electronics. We’re going to try to expand into the marine electronics part of it— GSP, fish finder, power poles, stuff like that,” Daigle explained. “If someone were to drop off a boat here and say, ‘Can you put everything on it?’ we could say yes.”

The shop utilizes the services of Modern Media Geeks for social media, as well as 168media for web content. “There’s still a little bit of thought process involved,” he added. “Right now, we live by word of mouth and repeat business. Eventually the word will get out, but it’d be nice if it could be faster.”

Use Market Research to Bolster Diversification Strategy

Deciding what will work best for a business takes a lot of thought. Cameron Powell of LIS Audio in Spring Hill, Kan. has reached out to customers to gain overall feedback.

“We asked customers, ‘What do you see that makes us different from another shop? Why would you go to us?’ We got a bunch of feedback,” Powell said. Through experience and customer feedback, he said he learned the local market in his area is lacking the kind of car audio culture that can be experienced in states like California or Texas.

“From our perspective, it seemed like the new thing we bring to the table, especially in Kansas City, is helping to create a culture around car audio,” he added. “We’re bringing that network together.”

Market research can have mixed results, said James P. Smith of ACT Audio, who noted that he reached out to clients one year and asked them, “If you could get one thing from ACT Audio for Christmas, what would it be?” The results of the survey revealed that customers wanted an alarm as part of a remote start installation.

“So, I went back to the store and the team and said, ‘When remote start season comes along, we’re kind of bad at adding on alarms,’” Smith said. “Everyone said they wanted a remote start and an alarm on this survey, so let’s offer the option to add an alarm to a remote start install.”

The add-on option didn’t work as well as Smith hoped when it came to increasing revenue. “What we did do is we revamped our selling strategy,” he said. “We have a checklist now. When you come in, I’ll walk you through the remote starters, top down, and all the features. We have totally flip-flopped our two-way versus one-way [remote start] sales. Four years ago, we’d sell 80-85 percent oneway, and 15-20 percent two-way. Now, we’re more like 70-75 percent two-way, by changing that sales strategy.”

The checklist gives them a chance to review everything. “Then we might say, ‘Okay, you said you didn’t want the Bluetooth, or you didn’t want this’—the stuff we know we discussed with them—to give them a second chance to say, ‘Actually, I do want that.’ We started adding more rear defrosters that way, more upgrades,” Smith explained, adding, “but we still didn’t sell more alarms.”

Diversifying Too Fast Can Lead to Difficulties

There is a danger in losing traction if not enough time is spent strategizing, Smith warned. The shop has diversified

When a vehicle comes into the shop, ACT Audio tests the battery and reports the findings to the customer. The added revenue of battery sales increases per-vehicle tickets.

into various categories over the years, including on-site work and breathalyzers.

They also added a vehicle accessory category and devoted a display in the store to light bars and other items. But when they moved to the new location, they began exploring higher-end car audio and started shifting in that direction.

“I think we shifted too quickly,” Smith added. “We shot ourselves in the foot a little bit and actually lost some business. [Since then] I’ve learned to sell better and read the customer better. You don’t want to assume someone doesn’t want a highend system. You don’t want to cut them short, but you also don’t want to overshoot a customer.”

Smith noted the importance of keeping communication open to find out “what they had, what they’re looking for, and educate them on what they could get.”

“Now, when a customer says, ‘Let me think about it,’ we’re always frank with them,” Smith said. “We say, ‘Is it the price? What’s the hurdle here?’”

That way, he added, they have an opportunity to backpedal if needed, before the potential client walks out. “We needed to step back.”

Connect Related Categories for Greater Customer Awareness

Tanner said paint protection is like a natural extension of window tinting. “For people who are buying a new car, now is a perfect time to try to protect the paint,” Tanner added. “We’re a 3M dealer, so we started with 3M Scotch Guard Pro. It is different to install than window tint, so it does require additional specialized training. Selling it is different, but it all ties together where it adds additional profit to the bottom line.”

LYNX Customs has had so much success with car wrapping that the shop plans to revitalize their branding and marketing strategy to specifically focus on this category.

After wrapping about 50 cars in 2018, LYNX Customs expects to double the number of vehicle wraps they'll complete this year.

Technicians are able to use the same plotter to cut the paint protection film that is also used for window tint film, Tanner noted. “We’re already paying for the resources to do it, so it just kind of made sense.”

While the shop got started in the category a few years ago, it has increasingly become a larger part of the business. “It’s becoming a bigger percentage of our revenue, and it’s a higher profit margin in a lot of cases,” Tanner said. It also brings in customer that wouldn’t ordinarily come to the store for other things, he added, stating that clients who come in for clear bra tend to be an older demographic. “That gives us the ability to sell driver safety devices like the Mobileye or blind spot cameras and detectors.”

With the addition of this category, there was no need to alter the facility, since the team is able to use the same bay they use for window tinting. “Our 3M distributor was good about coming in and doing the training as needed,” he added.

If a client comes in for a window tint job, they’ll often add paint protection, Tanner noted.

LYNX Customs also found that such categories draw in customers who might not ordinarily visit the store. When it comes to car wrapping, Farley said a lot of people who aren’t necessarily automotive enthusiasts would like to change the color of their car. “With the car wrap, you can get exotic colors you can’t really find elsewhere,” Farley said. “We’ve had a lot of good feedback about it. It’s one of those accessories that I think is really going to come up strong in the future.”

Increasing customer awareness became a focus when ACT Audio moved into their new building, Smith said. “I created a dealership book of everything we offer with pictures and different options. I drove around and talked to the dealerships and promoted all the things we can do that they might not have known about,” Smith explained. “We started getting a little bit of work from people we never got work from before.”

One of the more popular sellers, he added, turned out to be heated seats, which local dealerships didn’t realize ACT Audio was able to offer.

“It’s about communication and raising awareness,” Smith noted, adding that the shop plans to increase focus on powersports.

Choose a Focus When Adding Categories or Increasing Skillsets

Though ACT Audio has faced challenges, the shop succeeded in diversifying into smaller add-on services—such as battery testing and replacement.

“We now test every single car battery and report the findings to the customer, good or bad,” Smith said. “We created an account with Interstate and they keep their batteries here on consignment.”

When a car comes in with a bad battery, the shop calls the customer and lets them know. “We sell tons of batteries,” Smith added. “During remote start season, we were selling two to three batteries per week. It’s not a lucrative business, but it’s another $150 a week on top of your normal work, just by taking the time to test a battery.”

When they inspect a customer’s car prior to working on it, the shop will make suggestions about add-ons. “We’re combating our lower traffic we’ve had this year by maximizing per-car tickets.”

Additionally, the team is considering offering a basic detailing service. “We’re capitalizing more on each vehicle. One of our new hires says he’s really good at [car detailing].” If things work out, Smith added, they might already have experience they can utilize.

Diversifying can go well, or it can go badly, according to Farley. “You might get into something like GPS trackers and, hypothetically, there’s a need, but it’s tough if your customers aren’t demanding it. It might not be a wise move,” he said. “Sometimes you have to be honest with yourself. It’s an easy mistake to make as a small business owner to diversify into a category because you think it would be appealing and it doesn’t really work out for you.”

He said he thinks of it as a risk and reward scenario, adding that he’s learned the hard way when attempting diversification at LYNX Customs. One such category that flopped was LED lighting. “It comes down to need. We had to find something else just to stay alive,” he explained. “There is a risk. If it doesn’t work out, it could cost me a lot.”

He added that he’s looking forward to the future and taking care to weigh his strengths. “If I put all my muscle into something, it should work,” he said. “I diversify—but with a focus."